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Chapter 2
Important Marketing
Concepts
Chapter 2 slides
TIP
for Marketing
for
Know the terms to know
the concepts.
Pharmacists,
2nd Edition
Learning Objectives
• Define the following marketing terms: product;
core, expected, and augmented product;
marketing myopia; potential, target, and actual
markets; the marketing mix; the 4 P’s;
positioning.
• Describe two major categories of competitors.
• Differentiate internal from external customers.
• Explain the difference between the “products” of
pharmaceutical care and of dispensing activities
mandated by OBRA ’90 legislation.
• Identify and differentiate the various marketing
tasks, the type of demand they regulate, and
suggested strategies.
Defining the Product
Provided by
Pharmacists
Defining a “product” as a
tangible object
Typically defined by nonmarketers as
physical objects of value, such as a pill.
For marketers, the tangible product is only
a means of packaging a benefit.
Many benefits come in intangible packages
(e.g., pure services such as drug
information).
People do not buy drugs. They buy the
benefits that drugs can provide.
How marketers define
“product”
 Anything satisfying a need or want
Can be an object, service, activity,
person, place, organization, or idea
 This broad definition discourages focusing
only on tangible objects (e.g., drugs)
Changes focus from tangible object to
benefits received
Total product concept
Core
Product
Defines products
on several levels
Core product
Definition -- benefits resulting from
the overall product package
It is what the customer is really
buying. What is the core product of
A camera?
Makeup?
Drugs?
Medication therapy management (MTM)
services?
Marketing myopia
Shortsightedness of
marketers who become
preoccupied with selling
the tangible product while
failing to consider their
core product
How might pharmacists
suffer from marketing
myopia?
What are the consequences
of this?
Tangible
Product
Total product concept
Core
Product
Expected
Product
Expected product
Definition –what the customer
expects from the marketer
Depends on the purchasing situation
and the expectations set by the
marketer
Studies have shown that patients do not
expect much from pharmacists.
What do patients expect?
Total product concept
Core
Product
Expected
Product
Augmented
Product
Tangible
Product
Augmented product
(a.k.a. “differentiated”)
Definition -- bundle of services that
accompany the tangible product
Used to differentiate one’s product
package from competitors
Anything provided that is more than
that expected by the customer is
“augmented”
List some ways that pharmacists augment
the core product.
Example: Aspirin
Tangible
Core
Expected
Augmented
Medication therapy
management services
Tangible
Core
Expected
Augmented
Differentiating
Pharmaceutical Care
from Basic Dispensing
Quickly and clearly describe
the difference between
pharmaceutical care and
basic dispensing services.
Background
Many pharmacists and students can’t clearly
explain the difference between
pharmaceutical care and typical dispensing.
This is a serious problem because payers and
patients often wrongly believe that
pharmaceutical care services are covered by
dispensing fees.
In truth, dispensing fees cover only the
minimum level of service pharmacists are
capable of providing.
If pharmacists wish to expand their service
compensation beyond dispensing fees, they
must be able to articulate the differences.
Background
OBRA ’90 established the minimum
level of care required by pharmacists.
It mandated that pharmacists
Accurately dispense
Clarify incomplete or illegible prescriptions
Not dispense “obvious” errors
Keep patient profiles
Carry out simple drug-use review activities
“Offer” to counsel.
Limitations of OBRA ’90
Focuses on tangible products
Addresses only flagrant drug-related
problems (DRPs)
Doesn’t recognize value of pharmaceutical
care
Establishes standards that are far less than
what pharmacists are capable of providing
Pharmaceutical care/MTM
Assistance with drug therapy
individualized to patient need
Detects, prevents, and minimizes DRPs that
may not be revealed in normal dispensing
Requires a greater level of communication,
monitoring, and problem solving
e.g., patient and provider consultation,
planned monitoring and follow-up, care plans,
education
Services not covered by
OBRA ’90
 Consultations with patients, prescribers,
and other health care providers
 Treatment plans
 Detecting “safe” but less-than-optimal
therapy
 If it doesn’t hurt, then dispense it.
 Assisting in selection of appropriate drugs
 Training patients
 “Brown bag” drug review sessions
the Market for
Determining
Pharmacist Services
Market
A market is a set of anyone who
might conceivably buy a given
product.
Actual buyers
Potential buyers
Whenever there is a potential for
exchange, there is a market.
Total
Population
Potential
Customers
Targeted
Customers
Actual
Customers
Market
Actual market size depends on
Interest of the customer
Ability to access and pay for the
product
Willingness to pay.
Actual market may include
untargeted customers.
What is the market for
MTM services?
Potential customers
Target customers
Actual customers
What do pharmacists need
to do to expand the market
for MTM services?
Think interest, ability,
and willingness.
Marketing mix
(a.k.a. 4 P’s)
TIP
Everything you do is part
of the marketing mix.
Product
Place
Price
Promotion
Product
- fast, friendly service
- extensive
complementary drug &
merchandise selection
-disease management
services
-generic drugs
-computerized patient
profiles
-pleasant service
surroundings
-competent, empathetic,
& reliable care
Price
-dispensing fee
-percent of AWP
-insurance coverage
-copayment
-professional service fee
-financing
Promotion
-advertising
-direct marketing
-public relations
-personal selling
-sales promotion
Place
-easy access to the
pharmacist by telephone,
Internet, or in person
-convenient location &
parking
-delivery and mail
services offered
Product
Place
Positioning
Promotion
Price
Positioning (the
th
5
P)
 Process of creating a favorable image of a
product or business in the minds of the
customer (i.e., target markets)
 Image results from everything that the
customer see, hears, touches, smells,
tastes
 e.g., Starbucks
 Whether there is an active positioning
effort or not, an image will occur in the
mind of customers
What is the image of:
Oprah
Arnold Schwarzenegger
Christina Aguilera
Britney Spears
Donald Rumsfeld
Martha Stewart
The average pharmacist
Competitors
Need to be identified, monitored,
and beaten in the market
Identification of competitors
requires a clear definition of one’s
product(s), customer(s), and
market(s)
What markets are served by CVS or
Walgreens?
Competitor types
Intratype - similar or the same
products as the organization or
individual
GM/Ford, McDonald’s/Burger King
Intertype - distinctly different and
competing organizations or
individuals
Movie theaters, Richmond Braves, TV
Competition
Intratype competitors compete by
offering similar tangible and
augmented products.
Intertype competitors compete in
terms of the benefits provided.
Therefore, it is critical for
pharmacists to understand how
customers view their product.
 Competition depends on how a product is defined
in the mind of customers.
http://marketplacemoney.publicra
dio.org/display/web/2005/09/16/c
linic_on_aisle_one/
Options for illnesses after
MD office hours
Urgent Care Clinic
Retail Store Clinic
Emergency Room
What is a customer?
Customer
Marketers consider a customer to be any
person or group involved in or affected by
an exchange.
 External – people outside the organization
(patients, suppliers, third-party payers,
family members, other health care
professionals)
 Internal – people within the organization
(technicians, boss, people in other
departments)
Customers of MTM services
provided by Walgreens
External – people outside the
organization
Internal – people within the
organization
Definitions
Customer chain – relationships
between internal and external
customers that lead to final
product
Internal marketing – when
management treats internal
customers as they would treat
external customers
The task of marketing
is to influence demand
through various combinations of
the marketing mix.
Marketing tasks
Conversional marketing
Negative demand (dislike of
product)
Understand why people dislike and
develop strategies
Stimulational marketing
No demand (indifference or
disinterest)
Find ways to connect benefits of
product with person’s needs and
interests
Marketing tasks (cont)
Developmental marketing
Latent demand (strong
need, no product)
Identify unmet needs and
develop new products
Remarketing
Declining demand (and
further declines likely)
Regenerate demand by
repackaging product
Marketing tasks (cont)
 Synchromarketing
 Irregular demand (undesirable
fluctuations in business)
 Even out by “training” your customers
 Maintenance marketing
 Full demand (ideal situation)
 Prevent erosion of demand
 Maintain quality, keep up with customer
tastes, and outdo the competition
Marketing tasks (cont)
Demarketing
Overfull demand (demand exceeds
supply)
Long-term solution - increase
production. Short term – raise prices,
cut corners, restrict access
Countermarketing
Unwholesome demand (socially
undesirable)
Help people give up bad behavior
Summary
Knowing marketing terminology
helps in learning marketing
concepts.
Those concepts can be used to
Communicate with managers
Understand more complex topics.
Questions?